Monday, March 29, 2010

Chinese automaker agrees to buy Volvo

Maybe, in the end, the piecemeal dismantling of the U.S. automobile industry will turn out to have been a good thing -- that the sold-off subsidiaries will thrive under new ownership that lives in far-different continents and plays by far-different rules, and far-stronger U.S. automakers will emerge. But it's hard to see, now, how the Ford Motor Co.'s sale yesterday of iconic Swedish automaker Volvo to a Chinese conglomerate will ever turn out well. Yesterday's $1.8 billion sale, announced at a news conference in Goteborg, Sweden, turns Hangzhou-based Zhejiang Geely Holding Group, owner of Geely Automobile, from a small Chinese carmaker into a major player in the world automotive industry, according to the New York Times. Ford, the only one of three major U.S. automakers that did not take a bailout from the U.S. government, had already sold off its Jaguar and Land Rover subsidiaries in a restructuring effort. Zhejiang Geely promised to keep Volvo production facilities in Sweden, even though Ford already assembles Volvos for the Chinese market at a plant in Chongqing, which also assembles Mazdas for sale in China. Zhejiang Geely also promised to keep Volvo separate from its Geely Automobile subsidiary, which builds small cars and is China's 12th largest automaker but the country's second largest completely independent of government ownership, the Times said. “I want to emphasize that Volvo is Volvo and Geely is Geely — Volvo will be run by Volvo management,” Zhejiang Geely founder Li Shufu said at Sunday's news conference. “We are determined to preserve the distinct identity of the Volvo brand.” The Swedish government seemed satisfied with the deal and issued a statement endorsing it, the Times said. Having been scared last year by the near-collapse of Saab, the Swedish government has acquiesced to the sale of Volvo to an apparently well-heeled Chinese buyer. “The future road for Volvo Cars is now defined,” said Maud Olofsson, the Swedish deputy prime minister and minister for enterprise and energy. “Regardless of who owns Volvo Cars, its brand will still be Swedish.” The deal is scheduled to close in the third quarter of this year, the Times said. Ford lost billions on the sale, 11 years after it paid more than $6 billion for the Volvo brand. But Ford integrated Volvo technology and know-how into its own vehicles, the Times said, and will still supply engines and body parts to the company for an unspecified time.